The profits of CEZ have increased by over 150 per cent and reached a historical maximum of 13.7 billion CZK

We are pleased by the fact that we have managed to sell larger volumes of electricity and therefore increase our related revenues, including backup services, by more than 11 per cent, in spite of further reductions in the prices of electricity we supply to our domestic customers. Our total economic performance improved by 0.5 billion CZK, even though the depreciation costs rose by 2 billion CZK, following a full trial launch of the Temelin nuclear power plant. The above is a result of our successful commercial and marketing strategy, said Petr Voboril, the Vice-Chairman of the CEZ Board of Directors and the company Executive Director for Strategy. Over the first three quarters, CEZ increased its volume of sold electricity by 10 %, even though the prices of electricity in the Czech Republic had dropped by 6% compared to last year, while the prices of exported electricity had risen by 12.1 %.

The volume of electricity generated by CEZ power plants rose by 4 849 GWh (13.6 %) compared to last year, reaching the figure of 44 647 GWh, of which the generation output of coal-fired power plants increased by 1 160 GWh and the output of nuclear power plants by 4 327 GWh, as a result of the gradual launch of the reactor units of the Temelin nuclear power plant. On the other hand, the generation output of hydropower plants dropped by 638 GWh, due to the damages which the last year's floods had inflicted on the Štechovice and Orlik hydropower plants.

CEZ spent 2.6 billion CZK on investment, 1.6 billion CZK less than over the same period last year. The main investment project of the moment is the modernisation of Dukovany nuclear power plant.

The ongoing rationalising measures, aimed at optimising the organisational structure of the company, downsized the company personnel by 392 employees (5.4 %) in comparison with the previous year; the rightsizing took place namely in the nuclear power plants section. As of 30 September 2003, CEZ was employing 6 894 people.

The beginning of July saw the launch of the first stage of the REAS Project?, most of whose participants were employees of individual regional power utilities integrated in the CEZ Group. The first stage sought to identify potential for cost cutting within the entire CEZ Group, amounting to 2 billion CZK. October saw the launch of the second implementation stage, which included, among other things, the unification of REAS organisational structures (i.e. the regional power utilities associated in the CEZ Group), which is to be accomplished by 1 January 2004. This project should be accompanied by downsizing approx. 5% of personnel and is to be completed by the end of the next year.

For the next year, CEZ prepared a new product range for wholesale market. There has been a rapid increase of electricity prices on foreign markets. For example, the trading price of the equivalent of our yellow electricity on the German stock exchange in 2004 will be 20% higher than this year. The CEZ Power Company supplies its customers with products, whose average prices only increased by approx. five per cent, i.e. only one quarter of the German increase. This means that in 2004 the price of diversified electricity in the Czech Republic will be more than 100 CZK/MWh cheaper than the price offer in Germany. The existing customer demand has confirmed the fact that CEZ offers electricity for competitive price, as some business entities outside the CEZ Group contracted to buy as much as ten per cent more than last year.

A very frequently debated issue in connection with this topic is the much-awaited decision of the European Regulation Authorities (ERU), which is to determine the prices of electricity sold to end customers in 2004. The fact is that the slight increase of high-voltage electricity will only make up about 1-2 % of the final price, which is within the mathematical tolerance of the calculation. Moreover, the benefits which CEZ Group offers to its customers already in the last quarter of this year enable these customers to make use of the more cost-effective supply of the Rainbow Electricity product range (thus flattening the consumption chart). There is consequently no reason why the price of electricity supplied to households in 2004 should increase.

However, we may expect other sorts of pressures towards the increase of end prices, resulting e.g. from the increasing trend to subsidise electricity generated by renewable sources. One kilowatt-hour generated by CEZ Group is currently sold for less than 90 hellers, but the distribution companies have to buy electricity generated by wind power plants for 3 CZK /KWh.

	(million CZK)	up from last year
Total revenue - revenue for electricity and backup services	63 314 37 556	+ 40.8 % + 11.3 %
Total costs minus income tax	44 788	+ 20.2 %
Profit before taxation	18 526	+ 140.5 %
Profit after taxation	13 679	+ 152.9 %

Note: these are non-consolidated data calculated according to Czech accounting standards

Ladislav Kriz, CEZ Press Officer

31. 10. 2003